Monday, February 21, 2011

Renewable Energy Worth Billions in Health Benefits to Delaware

People instinctively know that renewable energy creates benefits by reducing pollution from dirty power plants. But can we back up what seems like a common sense assertion with hard figures? The answer is yes. We now have an estimate of these benefits, and the source of the calculation might surprise you.

Every two years, Delmarva Power is required to submit an Integrated Resource Plan (IRP) to the Public Service Commission. In the IRP, Delmarva Power details how it plans to meet its customers' needs and ensure the reliability of service. The latest draft IRP (
PSC Docket No. 10-2) was filed December 1, 2010.

The draft IRP presents a summary of the impacts of a variety of emissions reductions programs, and, for the first time, includes a calculation of the environmental externality costs and benefits of these programs. An externality is a cost or benefit that does not show up in a company’s financial results, but is instead imposed on a third party. For instance, a company that cuts costs by not controlling air emissions creates costs for those who breathe the resulting dirty air.

This new calculation is being included at the urging of the Markell administration. The Delaware Department of Justice, in
a filing to the PSC dated May 19, 2009, succinctly stated the case for including externalities in PSC proceedings:
A prominent obstacle to a level playing field for clean energy is that the external costs (e.g., environmental degradation and public health impacts) of using fossil fuel resources are not fully paid by energy generators, distributors or ratepayers, and are not and reflected in the price of the energy resource.
The draft IRP estimates the environmental impact of Delaware’s Renewable Portfolio Standard, the Energy Efficiency Resource Standard, the state’s participation in the Regional Greenhouse Gas Initiative (RGGI), the planned Bluewater Wind offshore wind project, other renewable energy sources coming on line, and a sharp reduction in emissions from coal burning power plants in Delaware.

The draft IRP presents an estimated economic benefit of these changes in power generation in Delaware, and it’s big: $1.8 billion to $4.3 billion over the next ten years. The figure is based on epidemiological estimates for health effects (such as lung disease and cancer) of reduced emission of NOx, SOx and particulate matter from power plants.

That comes to roughly $2,000 to $4,750 for every Delaware resident over the next ten years. You may never know if you would have gotten sick from the pollution removed from the air in the coming years. But significant numbers of your friends, families and neighbors are likely to remain healthy over the next decade because of Delaware's commitment to cleaner energy.

In annual terms (the calculation includes discounting for future dollars), the benefits total to $180 million to $430 million per year. Using
Energy Information Administration (EIA) figures, I calculate the health benefits of adopting the renewable energy programs mentioned above come to 12 percent to 30 percent of Delaware’s 2008 retail electricity sales.

Opponents of renewable energy assert that green energy is too expensive, though the estimates of the “green premium” are generally overblown and rather lacking in detailed analysis. Now we have a calculation of the benefits, and the results affirm that Delaware’s policies promoting renewable energy are economically sound.


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